On Wednesday, Merck & Co Inc (NYSE:MRK) and Hansoh Pharma, a Chinese biopharmaceutical company, entered into an exclusive global license agreement for HS-10535, an investigational preclinical oral small molecule GLP-1 receptor agonist.

Under the agreement, Hansoh Pharma has granted Merck an exclusive global license to develop, manufacture, and commercialize HS-10535. Hansoh Pharma will receive an upfront payment of $112 million and is eligible to receive up to $1.9 billion in milestone payments associated with the candidate’s development, regulatory approval, and commercialization, as well as royalties on sales.

Also Read: Viking Therapeutics Garners Analyst Support For NASH And Metabolic Programs

Hansoh Pharma may co-promote or solely commercialize HS-10535 in China. Merck will record a pre-tax charge of $112 million, or $0.04 per share, to be included in GAAP and non-GAAP results in the fourth quarter of 2024.

William Blair writes that Merck is seen as a strong candidate to acquire Viking Therapeutics Inc (NASDAQ:VKTX), leading to an expected sell-off in Viking shares. However, the analyst notes that the licensing agreement with Hansoh will not hinder Merck from pursuing additional external business development opportunities in the obesity space.

The licensing deal highlights Merck’s commitment to obesity, potentially driving further growth through additional partnerships. While the focus on Viking increases investment volatility, data from competitors or new licensing deals could significantly affect its stock.

William Blair remains confident that Viking offers a valuable asset with VK2735, a GLP-1/GIP dual agonist that could become a major player in obesity treatment due to its potential for monthly maintenance dosing and oral formulation options.

This asset could strengthen an acquiring company’s obesity portfolio, with additional potential from Viking’s amylin program.

Overall, the analyst is optimistic about Viking’s prospects, maintaining the stock as a top pick for 2025 and an Outperform rating on its shares.

Price Action: VKTX stock is down 11.4% at $41.37 at last check Wednesday.

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